Kellogg Co agreed to buy Pringles potato chips from Procter & Gamble Co for $2.7 billion in a cash deal that will nearly triple the cereal maker's international snack business. The transaction will also let household goods maker P&G finally leave the food business after its agreement with Diamond Foods Inc fell apart.
Adding Pringles chips to the mix will increase the size of Kellogg's snack business to where it will account for as much of total revenue as its well-known cereal business, the world's largest, with brands like Special K and Rice Krispies.
P&G had agreed to sell Pringles to Diamond Foods Inc last year, but that deal fell apart this month following the discovery of improper accounting that led Diamond to replace its chief executive and finance chief. The US government is looking into Diamond's accounting practices.
Diamond said on February 14-that it does not have to pay any break-up fee, and its shares rose nearly 5 percent.
With Diamond's future unknown, some analysts have begun to question the attractiveness of its snack food brands, Kettle potato chips and Pop Secret popcorn, to another buyer. Kellogg Chief Executive John Bryant, in an interview with Reuters, declined to comment on his company's interest in Diamond or any of its brands.
Comments
Comments are closed for this article.